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DECREE No

DECREE No. 84/1998/ND-CP OF OCTOBER 12, 1998 DETAILING THE IMPLEMENTATION OF THE LAW ON SPECIAL CONSUMPTION TAX

THE GOVERNMENT

Pursuant to the Law on Organization of the Government of September 30, 1992;

Pursuant to the Law No. 05/1998/QH10 of May 20, 1998 on Special Consumption Tax;

At the proposal of the Minister of Finance,

DECREES:

Chapter I

SCOPE OF APPLICATION OF THE LAW ON SPECIAL CONSUMPTION TAX

Article 1.- Subject to the special consumption tax are the following goods and services, except for cases stipulated in Article 3 of this Decree.

1. Goods:

a/ Cigarettes, cigars;

b/ Liquors;

c/ Beers;

d/ Under-24-seat cars;

e/ Gasoline of various kinds, naphtha, reformade components and other components for mixing gasoline;

f/ Air conditioners with a capacity of 90,000 BTU or less;

g/ Playing cards;

h/ Votive gilt papers, votive objects.

2. Services:

a/ Dancing halls, massage parlors, karaoke bars;

b/ Casinos, jackpot games;

c/ Horse or car race bet ticket selling;

d/ Golf business: sale of membership cards, golf playing tickets.

Article 2.- Special consumption tax payers include organizations and individuals (collectively referred to as establishments) that produce and/or import goods and/or provide services, which are subject to the special consumption tax as defined in Article 1 of this Decree.

Establishments producing goods subject to the special consumption tax shall only have to pay the special consumption tax thereon at the production stage.

Establishments importing goods subject to the special consumption tax shall have to pay the special consumption tax thereon at the stage of their import;

Establishments providing services subject to the special consumption tax shall have to pay the special consumption tax on the services provided for users.

Article 3.- Goods defined in Clause 1, Article 1 of this Decree shall not be liable to the special consumption tax in the following cases:

1. Goods which are directly exported to foreign countries, sold or consigned to export business establishments for export, by production and/or processing establishments;

In cases where an export business establishment that purchases goods subject to the special consumption tax from production establishment(s) for export does not export the goods but consumes such goods in the country, such export business establishment shall have to fully pay not only the special consumption tax for the production establishment(s) but also the value added tax in the stage of its trading;

2. Goods imported in the following cases:

a/ The import goods are:

- Humanitarian or non-refundable aids;

- Gifts from foreign organizations and/or individuals for State agencies, political organizations, socio-political organizations, social organizations, socio-professional organizations and armed forces units. Such gifts shall be fixed within the limits prescribed by the Government;

- Belongings of foreign organizations and/or individuals that enjoy diplomatic immunities, stipulated by the Vietnamese Government in accordance with the international agreements which Vietnam has signed or acceded to;

- Personal effects within the import duty-free luggage limit;

b/ Goods which are transshipped, transited or transported through Vietnam's border gates in the following forms:

- Goods transported directly from the exporter's port to the importer's port without arriving at a port of Vietnam;

- Goods transported to Vietnam's port(s) without filling the procedures for import into Vietnam, then transported directly to the importer's port.

- Goods deposited in bonded warehouses and then transported to other countries without filling the procedures for import into Vietnam under the regulations on bonded warehouses;

- Goods transited and/or transported through the borders and/or border gates of Vietnam according to the agreements signed between the Vietnamese Government and the concerned foreign government or between branches and/or local administrations of the two countries, as permitted by the Prime Minister;

c/ Goods temporarily imported for re-export or temporarily exported for re-import during the export-import duty-free period, as prescribed by the Law on Import and Export Taxes;

d/ Goods imported for duty-free sale to foreign agencies and foreigners in Vietnam, that are entitled to the diplomatic immunities and are exempt from import tax under the prescribed regulations;

Goods imported for duty-free sale in duty-free shops at international airports, seaports, railway stations and border-gates.

Establishments importing goods which are not subject to special consumption tax under the provisions of Clause 2 of this Article but used for other purposes shall have to make the special consumption tax payment declaration within 3 days from the date such import goods are used for other purposes.

Chapter II

TAX CALCULATION BASES AND TAX RATES

Article 4.- Bases for special consumption tax calculation shall be the tax calculation prices of taxable goods and services and tax rates.

Article 5.- The price for special consumption tax calculation, defined in Article 6 of the Law on Special Consumption Tax are specified as follows:

1. For home-made goods, it is the sale price set by the production establishments at the production places, not yet including special consumption tax.

For bottled liquors, the price for special consumption tax calculation shall not include the bottle prices.

2. For imported goods, it is the import tax calculation price plus (+) the import tax. In cases where the imported goods are entitled to the import tax exemption or reduction, the tax calculation price shall not include the import tax exemption or reduction amount.

3. For processed goods, it is the tax calculation price of the product of the same or equivalent type at the same time of goods delivery. In cases where the price of the product of the same or equivalent type is not available, the tax agency shall base itself on the market prices to determine the tax calculation price.

4. For goods sold by the mode of payment in installments, it is the lump-sum selling price (excluding the installment interests) of those goods, not yet including the special consumption tax.

5. For services, it is the service provision price, not yet including the special consumption tax.

The service provision price serving as a basis for the determination of sans-special consumption tax price for a number of activities is stipulated as follows:

- For golf business, it is the selling prices of membership cards and golf playing tickets.

- For casino, jackpot games, horse and car race bet ticket selling, it is the turnover from such activities, excluding the sum of prize money already paid to customers.

6. For goods and/or services used for exchange, internal consumption, gift or donation, it is the special consumption tax calculation price of the goods and services of the same or equivalent type at the time such activities are conducted.

The special consumption tax calculation prices of goods and/or services defined in this Article shall also include surcharges that the establishments are entitled to.

The Ministry of Finance shall provide detailed guidance for the determination of sans-special consumption tax prices which shall serve as bases for calculating tax on taxable goods and services in accordance with the provisions of this Article.

Article 6.- The special consumption tax rates for goods and services are specified in the following special consumption tax index:

THE SPECIAL CONSUMPTION TAX INDEX

No. Goods and services Tax rates (%)

I. Goods

1. Cigarettes, cigars

a/ Filter cigarettes produced mainly from imported raw materials, cigars 65

b/ Filter cigarettes produced mainly from domestic raw materials 45

c/ Non-filter cigarettes 25

2. Liquors

a/ Of over 40% proof 70

b/ Of from 30% to 40% proof 55

c/ Of from 20% to under 30% proof 25

d/ Of under 20% proof, including fruit-wines 20

e/ Medicated liquors 15

3. Beers

a/ Bottled beer, fresh beer 75

b/ Canned beer 65

c/ Draught beer 50

4. Cars

- Of 5 seats or less 100

- Of from 6 to 15 seats 60

- Of from 16 to under 24 seats 30

5. Gasoline of various kinds, naphtha, reformade components and

other components for mixing gasoline 15

6. Air conditioners with a capacity of 90,000 BTU or less 20

7. Playing cards 30

8. Votive gilt papers, votive objects 60

II. Services

1. Dancing halls, massage parlors, karaoke bars; 20

2. Casinos, jackpot games 25

3. Horse or car race bet ticket selling 20

4. Golf business: sale of membership cards, gold playing tickets 20

Hereunder are the specific provisions on the application of the special consumption tax rates to a number of goods and services:

1. For goods subject to the special consumption tax, the special consumption tax rates shall apply regardless of whether they are import goods or home-made goods.

2. Filter cigarettes produced mainly from imported raw materials are those produced with the imported raw materials accounting for 51% or more of the total volume of shred tobacco raw materials used therefor.

3. For medicated liquors, the tax rates shall apply irrespective of their alcoholic strength. A medicated liquor production establishment must obtain the medicated liquor production permit as well as the certificate of registration of the names, trade marks, labels and quality of its medicated liquor products, issued by the medical agency or the competent agency. As for the import medicated liquors, they must be examined and certified by the medical agency or the competent agency. If failing to obtain all the above-said papers, the establishment shall have to pay the special consumption tax at the tax rate set for the liquor of the same alcoholic strength.

4. Automobiles under the heading with tax rate of 30% shall include: cars of from 16 to under 24 seats, cars designed for the transportation of both men and goods that correspond to those of from 16 to under 24 seats and three-wheeled mopeds of different types.

5. For votive objects subject to the special consumption tax, they shall not include those being children toys and those used for decoration.

6. For goods items subject to the special consumption tax under heading "Gasoline of various kinds, naphtha, reformade components and other components for mixing gasoline", the Ministry of Finance shall coordinate with the concerned branches to provide detailed guidance therefor.

Chapter III

TAX REGISTRATION, DECLARATION, PAYMENT AND SETTLEMENT

Article 7.-

Establishments which produce goods and/or provide services, which are liable to the special consumption tax shall have to register the tax payment with the tax authority of the locality where they conduct production and/or service activities under the tax registration regulations and guidance of the tax authority.

The time-limit for tax registration is ten days from the date an establishment is granted the business registration certificate.

In case of a merger, amalgamation, division, splitting, dissolution, bankruptcy or change in its business line or business suspension, the production and/or business establishment shall have to make a declaration thereof with the tax authority within 5 days before such change occurs.

Article 8.- Establishments which produce goods items subject to the special consumption tax and use trademarks therefor shall have to register such trademarks with the tax authority of the locality where they conduct production or business activities within 5 days from the date such trademarks are used. When changing trademarks, establishments shall have to notify the tax authority within 5 days from the date of changing the trademarks.

Article 9.- Establishments which produce and/or import goods and/or provide services subject to the special consumption tax shall have to make special consumption tax declaration according to the following regulations:

1. Establishments producing goods and/or providing services subject to the special consumption tax shall have to make monthly special consumption tax declaration when selling the goods and/or providing services and submit the tax declaration to the tax agency within the first ten days of the following month. For a production and/or business establishment with a large payable special consumption tax amount, the special consumption tax declaration shall be made once every five days or every ten days according to the regulations of the tax authority.

Even if there is no payable special consumption tax in the month, a production and/or business establishment shall have to make its tax declaration and submit it to the tax authority.

2. Establishments importing goods shall have to make and submit the special consumption tax declaration upon each importation together with the import tax declaration to the import tax collecting agency.

3. Establishments that produce goods items subject to the special consumption tax from raw materials for which the special consumption tax has already been paid, when making special consumption tax declaration for the production process, shall be entitled to deduct the special consumption tax amount already paid for such raw materials if they can produce valid vouchers. The deducted special consumption tax amount for the raw materials must not exceed the special consumption tax amount paid for the production process.

4. Establishments that produce and/or deal in different kinds of goods and/or services subject to the special consumption tax with different tax rates shall have to declare the special consumption tax according to the tax rate applicable to each kind of goods or services; if they fail to determine payable tax amount according to each tax rate, they shall have to calculate and pay tax at the highest rate applicable to a certain kind of goods or services they produce and/or deal in.

The Ministry of Finance shall set the tax declaration form and guide the declaration.

Article 10.- The special consumption tax shall be paid into the State budget according to the following regulations:

1. Establishments producing goods and/or providing services subject to the special consumption tax shall have to pay the special consumption tax to the State budget at their places of production and/or business according to the tax payment notices issued by the tax authorities.

The deadline for tax payment for a month shall be stated in the tax notice but not later than the 20th of the following month; in cases where a production and/or business establishment has to pay a large amount of special consumption tax, it shall pay the special consumption tax once every five days or every ten days according to the tax payment notice issued by the tax authority.

For individuals and/or households producing goods and/or providing services subject to the special consumption tax, that are far away from the State Treasury, the tax authorities shall organize tax collection and remittance into the State budget. The time-limit for the tax authorities to remit the collected tax amounts into the State budget shall not exceed 3 days after such tax amounts are collected.

2. Establishments importing goods subject to the special consumption tax shall have to pay the special consumption tax upon each importation at the place of tax declaration. The deadline for issuing a notice and the deadline for payment of the special consumption tax on imported goods shall be the deadlines for the import tax notice and payment.

3. The special consumption tax shall be paid into the State budget in Vietnam dong. In cases where production and/or business establishments purchase, sell goods and/or provide services in foreign currency(ies), they shall have to convert such foreign currency(ies) into Vietnam dong according to the average exchange rates on the inter-bank market as announced by the State Bank at the time the turnover is generated for the determination of the special consumption tax amount to be paid in Vietnam dong.

Article 11.- Establishments producing goods and/or providing services subject to the special consumption tax shall have to make final settlement of the special consumption tax according to the following regulations:

1. Establishments producing goods and/or providing services subject to the special consumption tax shall have to conduct financial account settlement according to the State's regulations, which shall serve as basis for them to make the annual final settlement of the special consumption tax with the tax authorities. The tax final settlement year shall be the calendar year. If the establishments are allowed to apply financial account settlement years other than the calendar year, they shall still have to make the final settlement of the special consumption tax according to the calendar year. Within 60 days from the last day of a year, the establishments shall have to submit tax final settlement reports to the tax authorities and fully pay the outstanding tax amounts into the State budget within 10 days after submitting the final settlement reports; in case of overpayment, the overpaid amounts shall be deducted from the payable tax amounts of the following period.

2. In case of a merger, amalgamation, division, splitting, dissolution, bankruptcy or change in its business line, an establishment shall have to make the tax final settlement and submit a report thereon to the tax authority within 45 days after the decision on such merger, amalgamation, division, splitting, dissolution or bankruptcy is issued, and fully pay the outstanding tax amount into the State budget within ten days from the date of submitting the final settlement report; in case of overpayment, the overpaid amount shall be deducted from the payable tax amount of the following period or reimbursed in accordance with Article 13 of the Law on Special Consumption Tax and Article 12 of this Decree.

Article 12.- Establishments producing and/or importing goods subject to the special consumption tax shall have their paid special consumption tax amounts reimbursed in the following cases where:

1. The goods are temporarily imported for re-export;

2. The goods are raw materials imported for the production or processing of export goods under the goods production and/or processing contracts with foreign parties;

3. They have an overpaid tax amount in the tax final settlement upon the merger, amalgamation, division, splitting, dissolution or bankruptcy;

4. They acquire tax reimbursement decisions issued by the competent agency as prescribed by law.

Cases mentioned in Clauses 1 and 2 of this Article shall be entitled to the special consumption tax reimbursement only for the actually exported goods.

The Ministry of Finance shall specify the procedures and competence for deciding tax reimbursement as prescribed in this Article.

Article 13.- Establishments producing, importing goods and/or providing services subject to the special consumption tax shall have the responsibility:

- To make tax registration, declaration, payment and final settlement in accordance with the provisions of law; to fully comply with the tax declaration, tax final settlement and tax reimbursement forms and be accountable for the accuracy of their declaration, final settlement or reimbursement;

- To strictly abide by the regulations on accounting, vouchers and invoices when buying, selling and/or transporting goods, and/or providing services, which are subject to the special consumption tax, as prescribed by law;

- To fully supply dossiers, materials and data as well as bases related to the tax calculation, payment, final settlement and requests for special consumption tax reimbursement to the tax authority.

Article 14.- The tax authority shall have the following tasks, powers and responsibilities:

1. To guide the tax payers in implementing the regulations on tax registration, declaration and payment as prescribed by law;

2. To send the tax payers notices on the payable tax amounts and the tax payment deadlines as prescribed; to issue another notice on the payable tax amount and fine for late tax payment under Clauses 2 and 3, Article 17 of the Law on Special Consumption Tax if past the deadline stated in the first notice, a tax payer fails to pay tax; if such tax payer still fails to fully pay tax and fine for late tax payment stated in the second notice, the handling measures prescribed in Clause 4, Article 17 of the Law on Special Consumption Tax shall be applied to guarantee the full collection of tax and fine; if such tax payer still fails to pay full amount of tax and fine even after such measures are applied, the dossier of the case shall be transferred to the competent State agency for handling according to law.

3. To examine and inspect the tax declaration, payment and final settlement by tax payers in order to ensure the strict observance of law;

4. To handle tax-related administrative violations and settle tax-related complaints;

5. To request tax payers to supply accounting books, invoices, vouchers as well as other records and documents related to the tax calculation and payment;

6. To keep and use data and documents supplied by tax payers and other subjects in accordance with the regulations.

Article 15.- The determination of the special consumption tax is prescribed as follows:

1. The tax authority shall be entitled to set the payable special consumption tax amount for a tax payer in the following cases where the latter:

a/ Fails to implement or has improperly implemented the regulations on accounting, invoices and vouchers;

b/ Fails to declare tax or to submit the tax declaration within the notified time-limit; or has submitted the tax declaration but falsely declared the bases for determining the special consumption tax amount;

c/ Refuses to produce accounting books, invoices, vouchers and necessary documents related to the special consumption tax calculation;

d/ Is found having conducted business without any business registration.

2. The tax authority shall base itself on documents related to the investigation of production and business activities of the concerned tax payers or on the tax amounts to be paid by other production and/or business establishments with the same business line and scale to determine the payable tax amounts for cases stipulated in Clause 1 of this Article.

Chapter IV

SPECIAL CONSUMPTION TAX REDUCTION AND EXEMPTION

Article 16.- The special consumption tax reduction and exemption stipulated in Article 16 of the Law on Special Consumption Tax are detailed as follows:

1. Establishments producing goods subject to the special consumption tax, which meet with difficulties due to natural calamities, enemy sabotages or unexpected accidents, shall be considered for special consumption tax reduction or exemption. The tax reduction or exemption shall be decided according to the year when losses are caused. The reduction levels shall be determined based on the losses caused by natural calamities, enemy sabotages or unexpected accidents but must not exceed 30% of the payable tax amount prescribed by law. In case of heavy losses that make the establishments unable to continue their production and/or business activities and to pay tax, they shall be considered for the special consumption tax exemption.

2. Small-scale beer-producing establishments with capacity of 10 million liters/year or less, which have been set up and operating before January 1st, 1999 and which, after having fully paid tax according to the tax rates prescribed in the Special Consumption Tax Law, still suffer from losses, shall be considered for special consumption tax reduction corresponding to the loss amount. The tax reduction duration shall be annually calculated according to the calendar year but shall not exceed 5 years from January 1st, 1999.

3. Automobile assembling and/or manufacturing establishments shall be entitled to the 95% reduction of the tax rate specified in the special consumption tax index for the first 5 years, from January 1st, 1999 till the end of December 31st, 2003.

If after five years' enjoying the tax reduction as mentioned above, an automobile assembly and/or manufacture establishment still suffers from losses, it shall be considered for further tax reduction for from 1 to 5 more years. The tax reduction levels shall be specified by the Government according to the practical situation.

4. A golf business establishment shall be entitled to the 30% reduction of the tax rate specified in the special consumption tax index as prescribed in Article 7 of the Law on Special Consumption Tax for three years after the Law on Special Consumption Tax takes effect.

5. Other cases of tax exemption or reduction according to law shall be decided by the Government on a case-by-case basis at the proposal of the Ministry of Finance.

The Ministry of Finance shall guide the procedures, order and competence for the consideration of tax reduction and exemption as prescribed in this Article.

Chapter V

HANDLING OF VIOLATIONS, COMMENDATION

Article 17.- Tax payers, tax officials and other individuals who violate the Law on Special Consumption Tax shall, depending on their acts and the seriousness of their violations, be sanctioned in accordance with the provisions of Articles 17 and 19 of the Law on Special Consumption Tax. In cases where the concrete levels of sanctions are not provided for in the Law on Special Consumption Tax, the levels of sanctions stipulated in other legal documents on the handling of tax-related administrative violations shall apply.

Article 18.- Tax agencies and officials that well perform their assigned tasks; organizations and/or individuals that record achievements in the implementation of the Law on Special Consumption Tax; and tax payers who well fulfill their tax obligations shall be rewarded in accordance with the regulations of the Government.

Chapter VI

ORGANIZATION OF IMPLEMENTATION

Article 19.- This Decree takes effect from January 1st, 1999. To annul Decree No.97/CP of December 27, 1995 as well as the provisions on the special consumption tax in other legal documents from the date this Decree takes effect.

The settlement of tax-related problems, tax final settlement, tax exemption and/or reduction or tax preferences as well as the handling of special consumption tax-related violations before January 1st, 1999 shall comply with the corresponding provisions of the Law on Special Consumption Tax, the Law on the Amendments and Supplements to a Number of Articles of the Law on Special Consumption Tax and the provisions on the special consumption tax in legal documents that are still effective at that time.

Article 20.- In cases where an international agreement which the Socialist Republic of Vietnam has signed or acceded to contains provision(s) different from those of the Law on Special Consumption Tax, the special consumption tax shall be applied in accordance with the provision(s) of such international agreement.

Article 21.- The special consumption tax collection is stipulated as follows:

1. The General Department of Taxation shall have to organize the special consumption tax collection from establishments which produce goods and/or provide services subject to the special consumption tax.

2. The General Department of Customs shall have to organize the special consumption tax collection from establishments which import goods subject to the special consumption tax.

3. The General Department of Taxation and the General Department of Customs shall have to coordinate with each other in the management of the special consumption tax collection nationwide.

The Ministry of Finance shall detail the organization of special consumption tax collection according to the provisions of this Article.

Article 22.- The Minister of Finance shall guide the implementation of this Decree.

The ministers, the heads of the ministerial-level agencies, the heads of the agencies attached to the Government, the presidents of the People's Committees of the provinces and centrally-run cities shall have to implement this Decree.

On behalf of the Government

Prime Minister

PHAN VAN KHAI